Company History:

The largest distributor of sports memorabilia in the United States, The Score Board, Inc. markets sports and entertainment memorabilia through retail stores, mail-order catalogs, and on cable television. Score Board began as a distributor of baseball trading cards before branching out into other sports and into the market for entertainment memorabilia. During the late 1990s, the company owned licensing agreements to market Star Trek and Star Wars memorabilia, as well as contracts with numerous famous athletes for the provision of autographed memorabilia. Sales of memorabilia accounted for roughly one quarter of the company's total sales during the late 1990s with the balance derived from the manufacture and sale of sports related trading cards.

Origins

When seven-year-old Ken Goldin began collecting baseball trading cards in 1972, the seeds were planted for a company that would become one of the phenomenal stock market success stories of all time. Goldin's interest in baseball cards as a child sparked commensurate interest in his father, Paul Goldin, who orchestrated the development of Score Board into a national leader and created a pioneer company in a burgeoning industry. Before father and son launched into business together, however, their shared interest in baseball cards represented more of a hobby than a business, albeit a hobby pursued with considerable zeal. Ken and Paul Goldin were ardent collectors and sellers, enriching their collection and pocketbooks by travelling to trade shows and purchasing and selling cards through advertisements. By age 11, Ken Goldin undoubtedly ranked as the biggest money-earner among pre-teens in his neighborhood, frequently earning $1,000 a week by selling baseball cards.

As the Goldins delved deeper and deeper into baseball card trading, their hobby gradually evolved into a business. By 1980, father and son had spent nearly $200,000 amassing an inventory of five million cards, a prodigious collection that placed them among the ranks of the nation's most serious collectors. In the decade ahead, the number of serious collectors like the Goldins would grow exponentially as the value of famous players' cards increased robustly. During the 1980s, the sport-related trading card market grew by leaps and bounds, with the value of renowned players' rookie cards increasing 40 percent per year and the number of baseball card stores increasing from 500 at the beginning of the decade to 14,000 by the decade's conclusion.

The proliferation of these stores provided fertile ground for the type of business Paul Goldin envisioned, and their propagation was occasioned by two signal developments. In 1979, the first price guide for baseball cards was published, giving collectors for the first time the common means to determine what their collections were worth. Two years later another key development facilitated the emergence of a booming industry when the major baseball card manufacturer Topps Chewing Gum Inc. lost an antitrust suit, which provided room for additional card manufacturers such as Fleer Corp. and Donruss Leaf Inc.

More competition and the ability to assay card worth set the stage for prolific growth, but it was not until midway through the 1980s that Paul Goldin tapped into the market as a full-fledged entrepreneur. During the first half of the decade, father and son conducted their baseball trading activities much as they had done during the 1970s; they sold their cards at weekend sport-card shows and through mail order catalogs. By 1985, however, Paul Goldin began to realize the opportunity presented by the slew of new baseball card stores opening across the country. At the time, Goldin was serving as president of a medical equipment company (Creative Medical Systems Inc.), which he had helped get off the ground, while also teaching at Drexel University in Philadelphia as an associate professor of statistical economics.

Nevertheless, Goldin's hectic professional life did not preclude him from starting another business. Goldin and an associate named Arthur Sherman, who was employed as the senior vice-president of marketing for Trenton, New Jersey-based Magic Marker Industries, began discussing the possibility of turning a baseball card hobby into a business and developed a specific strategy. "There was room in the [baseball trading card] business, I figured," Goldin later told Nation's Business, "for someone who could supply dealers with large quantities of the best players."

1987 Public Stock Offering

Goldin and Sherman resolved to buy baseball cards in bulk from the major card producers, cull the star players out of the sets to sell them to the increasing number of card stores, and repackage the remaining cards for sale to retail stores. In November 1986, the two partners got underway, with Goldin devoting 20 percent of his time to the newly created Score Board as chairman, Sherman assuming the duties of president and chief operating officer, and Ken Goldin, by then 21 years old, beginning as merchandise manager. Much of the first year was spent organizing and equipping the company with a sufficient inventory to successfully compete as a merchandiser and wholesaler of baseball trading cards.

In August 1987, after an adequate inventory had been established, the company converted to public ownership, becoming the first company of its kind to do so, and raised $2.43 million through an initial public offering of 77 million shares of stock at 3.5 cents each. What began as a risky "penny stock" quickly developed into a lucrative investment for those who picked up the stock at its debut, because Goldin's strategy worked wonders. Score Board flourished during its inaugural decade, developing into an industry powerhouse without rival.

By the end of Score Board's first year, sales amounted to $780,692, from which the company recorded a net loss of $352,782. The year-end figures were deceptive, however, because the company was not operational until its fourth fiscal quarter, when it generated more than $600,000 and registered $42,000 in profit. From this starting point, Score Board's financial totals marched strongly upward, propelled by the insatiable demand for baseball trading cards. By the summer of 1988, after recording $1.4 million in sales and $217,000 in net income during the first fiscal quarter, Score Board's inventory was valued at $1.5 million, its breadth and depth built up by weekend trips to card shows across the nation.

From these moveable feasts of sports memorabilia, the company's purchasing agent procured older cards and other sport-related treasures, such as Pete Rose's 1978 jersey, bats used by Babe Ruth and Ty Cobb, and a 1914 Athletics vs. Braves World Series program. For the new cards, Score Board acquired substantial quantities from the three major card manufacturers, Topps Chewing Gum Inc., Donruss Leaf Inc., and The Fleer Corp., and a Texas-based company named Score. These cards were then repackaged by the company's 20 part-time workers--high school students mainly--who sorted the cards into sets for sale through mail order and at retail outlets.

The response to Score Board's approach was immediate and widespread, as the $1.4 million in sales for the first quarter of 1988 testified. However, Goldin was not satisfied and moved quickly into other business areas before pausing to celebrate Score Board's encouraging debut. While Ken Goldin was dividing his time between his father's company and completing his business degree studies at Drexel University at night, his father diversified into markets related to merchandising sports memorabilia. In January 1988--five months after Score Board's initial public offering--Goldin reached an agreement with the National Collegiate Athletic Association (NCAA) Final Four Foundation to produce a limited-edition set of five lithographs depicting the 50th anniversary of the annual college basketball tournament.

Goldin also launched a publication division that published "The Score Board Book of Baseball Cards," "The Baseball Engagement Book," and a National Football League "Football Date Book." Complementing the product line was a videotape distribution business, featuring such titles as "The 500 Home Run Club," and the merchandising of sundry sport-related novelties, including towels, aprons, and ceramic collectibles. Midway through the year, Goldin was preparing to widen Score Board's scope further by adding a board game manufacturing subsidiary through the acquisition of Atlanta-based Gametime Ltd. and its baseball trivia board game. On all fronts, the company was moving forward, securing an intractable hold on various sports memorabilia markets before serious competition could muster a response.

Goldin did not hold back in 1989, opting instead to continue increasing Score Board's exposure and presence in various sports memorabilia niches. Sales for the year reached $20 million, thanks in large part to the debut of the company's merchandise on cable television's Home Shopping Network. In front of millions of viewers, sports celebrities such as Hank Aaron chatted with a host, who in turn sold Score Board's sports memorabilia. The contribution to Score Board's financial status was immediate and large; by the end of 1989 roughly half of the company's entire revenue volume was derived from sales made on the Home Shopping Network.

Another key development during the year was the decision to sign agreements with sports stars to autograph sports equipment and novelties for sale to the public. Million dollar deals were signed with revered athletes such as Nolan Ryan, Mickey Mantle, and Roger Clemens, who agreed to sign their name to merchandise in return for payment. Dozens of athletes were signed to multi-year deals, providing a powerful revenuegenerating engine to the quickly blossoming Score Board.

1990s Diversification

Sales climbed to $32 million by the end of 1990, making Score Board the largest national distributor of sports cards and autographed memorabilia in the country. During the early 1990s, Goldin's efforts to diversify Score Board's business made for an increasingly well-rounded company, particularly his move into manufacturing. During its first years of business, Score Board profited as a merchandiser of other companies' memorabilia, but by the beginning of the 1990s the company also began to merchandise memorabilia manufactured by itself, including trading cards through a licensing agreement with the Worldwide Wrestling Federation, board games through a licensing agreement with major league baseball, and memorabilia bearing the autographs of star athletes.

Goldin's most ambitious move during the early 1990s, however, had nothing to do with sports. In pursuit of business that could maintain Score Board's prolific pace of growth, Goldin entered into the market for entertainment related memorabilia and created a wholly owned subsidiary named Catch a Star to facilitate the company's entry into the entertainment memorabilia market.

As the company's entertainment memorabilia business was taking shape, aided by memorabilia distribution contracts with Elvis Presley Enterprises and Paramount Pictures, progress continued to be made with Score Board's mainstay sports memorabilia business. Early in 1991 the company purchased Best Cards Co. and its license to manufacture and sell minor league baseball cards. Later in the year two other pivotal deals were made: In September, National Football League Properties granted Score Board a three-year license to produce and market trivia board games featuring National Football League players, and in October the company announced it had developed a basketball memorabilia program that included contracts with basketball stars Julius Erving, Kareem Abdul Jabbar, Patrick Ewing, and Dominique Wilkins.

The consistent development of new memorabilia-related business pushed sales in 1991 up to $46.5 million and lifted profits to $4.8 million, as the more than four million serious collectors in the United States continued to pay dearly for sports cards, signed memorabilia, and entertainment related merchandise. Annual sales leaped to $75 million in 1992 and the company recorded a 687 percent gain in stock performance, the second-best on the NASDAQ exchange for the year. For those investors who purchased Score Board stock at its debut of 3.5 cents per share there were bountiful yields to be realized. Score Board's stock was trading at roughly $45 per share by 1992, a prodigious climb that continued to move upward despite the sluggish economy prevailing during the recessive early 1990s. By 1993, the company's foray into entertainment memorabilia had been strengthened considerably by the addition of licenses to sell collectibles based on the films Star Trek, Star Wars, Gone with the Wind, and The Wizard of Oz, as well as certain rights to market memorabilia connected to singer/songwriters Elvis Presley and John Lennon.

The push was on to expand memorabilia lines in 1994, as the company strove to maintain the animated growth that had described its first half decade of business. During the year, an agreement was signed with Matsushita's MCA subsidiary Winterland Productions, the country's leading music merchandiser. Under the terms of the agreement, Score Board developed memorabilia based on Winterland artists, the ranks of which included recording artist Madonna. The company also began marketing prepaid, theme-based telephone cards in 1994, but the most overshadowing development during the year was the death in May of Paul Goldin.

Retooling for the 1990s and Beyond

Goldin's son Ken assumed the responsibilities of Score Board's chief executive office. Upon taking command of a business his father had built into a $100 million company, Ken Goldin, then 29 years old, declared to Forbes magazine, "I'm not interested in any business that isn't profitable," words Goldin would quickly have to act upon. Competition had become intense in the baseball trading card market, leading to an oversupply of cards on the market. The surfeit of cards was exacerbated by strikes in two major league sports, the combined effect of which stripped the company's stock of much of its value. Goldin was forced to restructure Score Board in 1995 as a result, making good on his words to eschew any business deemed unprofitable. As part of the restructuring program, Goldin spun off Score Board's California Gold plaque and framing operations and laid off eight percent of the company's workforce.

After cresting at $108 million in 1994, sales shrank to $72 million in 1995 before recording a marginal gain to $75 million in 1996, the same total generated in 1993. The company's net income dipped into the red as well, but as management was taking steps to strengthen the company's position for the late 1990s it was hoped the setback during the mid-1990s was only a temporary one. As a foundation for future growth, Score Board continued to hold valuable contracts with numerous sports celebrities and maintain a broad presence in sports and entertainment memorabilia markets, factors the company's management hoped would hold Score Board in good stead as the 21st century neared.